The Euro to Pound Sterling (EUR/GBP) exchange rate advanced by around 0.48% on Wednesday morning.
Despite the fact that the European Central Bank has stated that they will cut liquidity assistance for Greek banks if Athens cannot secure a deal for bailout by Sunday, the shared currency strengthened versus many of its peers. This is the result of Greek officials having been given until Sunday to secure a deal, rather than just hours.
The Pound, meanwhile, softened after a report from Recruitment and Employment Confederation (REC) and accountants KPMG showed the pace of UK hiring slowed in June. In addition, futures traders were forced to delay bets as to the timing of a Bank of England (BoE) interest rate increase after manufacturing data showed weakness due to the overvalued Pound.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7153.
Yesterday…
The Euro to Pound Sterling (EUR/GBP) exchange rate gained by around 0.11% on Tuesday afternoon.
Euro (EUR) Exchange Rate Forecast to Edge Higher against the British Pound despite Extended Greek Capital Controls, Tsipras given just Hours to Submit Reforms
The well documented Greek crisis is coming to a head after the referendum saw a massive 61% victory for those opposed to the austerity measures proposed by creditors. Eurogroup finance ministers convene today to discuss the crisis and Athens has been given just hours to prepare and submit a fresh proposal to unlock aid. This proposal is likely to include a large debt relief incentive which has been a sticking point with finance ministers despite the fact that the International Monetary Fund (IMF) conceded the fact that Greece could not sustain a recovery without debt relief.
The trouble is that many European officials have seen their native countries spend a lot of tax money propping up Greece and are accordingly showing diminished patience with the Hellenic nation. Understandably, there is a growing rift between Greece and European countries that have already submitted to creditor demands and accepted harsh austerity measures. It has been reported that as many as 16 of the other 18 countries in the currency bloc are in favour of a Grexit. However, the European Commission overseeing negotiations has stressed its willingness to do as much as it can to keep Greece part of the currency union.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7090.
Pound Sterling (GBP) Exchange Rate Forecast to Gain against the Common Currency despite Mixed Domestic Data
The British asset climbed versus many of its peers on Tuesday morning despite registering mixed domestic data. May’s Industrial Production came in at 2.1% on the year; bettering the median market forecast 1.6% growth. On the month, Industrial Production came in at 0.4% in May. However, Manufacturing Production hit 1.0% on the year in May, failing to meet with the market consensus of 1.8% growth. May’s Manufacturing Production declined by -0.6% on the month.
Joe Grice, chief economist at the Office for National Statistics, said car makers had a particularly good run in May. He said; ‘Today’s manufacturing output figures paint a mixed picture. There appears to have been a distinct slowing during the first few months of 2015 in a number of sectors, but others continue to grow strongly. Motor manufacturing, in particular, continued its impressive recent performance in May.’
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Hold Losses as Greek Geopolitics Cause Uncertainty
Given the mounting unknowns and uncertainties triggering Euro volatility, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to hold gains. Much depends on the Eurogroup meeting, however. If Greece secures a deal to unlock aid the Euro will strengthen considerably. Similarly, if talks break down then the Euro could dive given that Greece has no time left for negotiations. Although there is a lack of significant domestic data on Wednesday, EUR/GBP trade will be dominated by geopolitical developments.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending within the range of 0.7059 – 0.7090.
